Private company providing loan to another pvt co

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senthil (Querist)
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03 March 2013 If 2 private companies are under same management(including same Managing director), is it possible for that company to provide loan to other company.

Is there any limit for doing so??

Ajay Mishra

Ajay Mishra (Expert)
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03 March 2013 Hi

Yes, they can give for this you can pass a board resolution.

Pass a resolution under section 292 of the Companies Act, 1956.

Ajay Mishra

Ajay Mishra (Expert)
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03 March 2013
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS OF (NAME OF THE COMPANY) HELD AT THE REGISTERED OFFICE OF THE COMPANY AT (ADDRESS) ON (DATE) AT (TIME)

The board was informed that a request has been received to make loan (s) and/or give guarantee(s)/provide any security(ies) in connection with loan(s) made to and/or acquire by way of subscription, purchase or otherwise the securities by a sum not exceeding to Rs._____________ (Amount in words) in aggregate as mentioned against them in one or more tranches to meet their business requirement. The Board discussed the matter and passed the following resolution: -

“RESOLVED THAT pursuant to the provisions of Section 292 (1)(e) and other applicable provisions, if any, of the Companies Act, 1956 or subject to such modification and re-enactment thereof, consent of the Board of directors of the Company be and is hereby accorded for making of unsecured loan not exceeding to Rs._____________ (Amount in words) to the following person/ individual/ proprietorship concern/ partnership firm, in one or more tranches, and on such other terms and conditions as may be mutually agreed between the both parties :

Name of the person/individual /proprietorship concern Amount in Rs.

"FURTHER RESOLVED THAT (Name of the person(s) authorized) be and are hereby severally authorized to do all such acts ,deeds and things as may be required to give effect to this resolution.”

senthil

senthil (Querist)
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03 March 2013 Thanks.. ALso clarify whether ther is any limit in the quantum of loan that can be provided?(like we have in 372A)

what about the interest rate?

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